This article uses a Multiple Indicators Multiple Causes (MIMIC) model to analyse the determinants of smuggling. The analysis reveals that higher corruption and a lower rule of law encourage smuggling. Tariffs and trade restrictions are important push factors, while a higher Black Market
Premium (BMP) discourages smugglers. Based on the MIMIC estimates, we calculate an index of smuggling which provides a ranking for 54 countries. We find that smuggling is rampant in Cameroon, Pakistan and Kenya while it is least prevalent in Switzerland, Finland and Sweden.
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Document Type: Research Article
Faculty of Business and Economics, Chair of Economics, esp. Monetary Economics,Dresden University of Technology, Dresden01062, Germany
Faculty of Business and Economics, Chair of Economics, esp. Public Economics,Dresden University of Technology and Centre for European Economic Research (ZEW), Dresden01062, Germany
Publication date: 2012-08-01
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